When allegations of child abuse emerged at Australia's oldest yoga ashram, the main concern from its spiritual headquarters in India was protecting its reputation, a royal commission has found.

The Royal Commission into Institutional Responses to Child Sexual Abuse has examined the handling of complaints made against the former spiritual leader of the Satyananda Yoga Ashram, at Mangrove Mountain on the New South Wales Central Coast, Swami Akhandananda Saraswati, and his former partner Shishy.

During public hearings in October 2014, six survivors each called for a $1 million compensation payment.

They gave graphic accounts of abuse at the ashram, which housed between 12 and 22 children at any time, aged between four and 18.

The commissioner's report was critical of the ashram's management.

"During the public hearing, the Mangrove ashram invited requests for compensation from some, but not all, of the survivors of child sexual abuse ... This apparent distinction between survivors remained unexplained at the close of the public hearing," the report said.

"We consider that the Mangrove ashram ... in direct contrast with the sentiments expressed in the ashram's apology ... adopted an approach that was at times insensitive, defensive and legalistic."

Children developed 'cult-like' dependence

The report found children were routinely separated from their families and developed a "cult-like dependence" on Shishy, "who clearly played a significant role in their lives in the absence of their parents".

During the hearing, Shishy said "blind devotion" to the guru was "heavily encouraged, and this involved being obedient without question".

The report said: "Mangrove ashram ultimately culminated in a complete and unquestioning trust by both adults and children alike in the erratic and irrational actions ... of Akhandananda as the guru."

The royal commission heard some victims were threatened with murder if they reported the abuse, and that Shishy witnessed Akhandananda raping two girls.

The commissioners Justice Jennifer Coate and Professor Helen Milroy accepted Shishy was herself in a violent relationship with Akhandananda, "and this came to include sexual violence".

"Shishy said this included Akhandananda putting a gun in her vagina and cutting her vagina with nail scissors."

Violence created a culture of fear

"It is clear that the culture of violence and humiliation that Akhandananda fostered at the Mangrove ashram gave the children who lived there a fear of reprimand that prevented them from disclosing their sexual abuse," the report said.

"The fact that Akhandananda's violent discipline of adults and children alike was not challenged by any other adult in the ashram who gave evidence only served to fortify the children's fear of reprimand.

"We heard evidence of threats of significant harm, including death ... We heard evidence of grown men being beaten with a stick in front of adult onlookers.

"We also heard considerable evidence of beatings of children.

"We are satisfied that the physical abuse that the children experienced or witnessed contributed to a culture of fear of Akhandananda that prevented children from disclosing their sexual abuse."

Global headquarters feared for its reputation

The Bihar School of Yoga, which is the global headquarters of the late Swami Satyananda Saraswati's teachings, provided a statement to the commission in 2014 and said it "did not know the appalling extent of the abuse nor how widespread it was".

The royal commission was also shown an email from the organisation to the ashram that expressed outrage at the current leader being linked to the investigation of "20 year old sex scandals" that would "tarnish his reputation".

"After a lifetime in support of Australia, Swami Niranjan and Bihar School of Yoga, in disgust, withdraw their association and support completely," it read.

The commissioners said: "When those responsible for management of the Bihar School of Yoga first heard about the royal commission's investigation of the sexual abuse of children by Akhandananda, their primary concern was to minimise the risk of damaging the reputation of Satyananda yoga."

"The Bihar School of Yoga's response did not properly prioritise the welfare of survivors over the interests of the 'brand' of Satyananda yoga."

The ashram is now called Mangrove Yoga, having previously traded as the Satyananda Yoga Academy.

The commission said the case study would help identify the potential problems with power imbalances involving a charismatic leader at an isolated institution; the isolation of children from their parents and the community, and meeting the needs of survivors of child sexual abuse.